Although we do not see such an abundance of startup crypto projects today as we did in ICO, but according to CoinMarketCap, the number of new crypto and tokens is steadily increasing. There are over 9,000 different digital assets, which are sometimes extremely problematic to deal with. In this material, we’ll talk about how to isolate the truly worthwhile crypto coins from their abundance on the market.
A year ago, when decentralized exchanges were at the design stage, there were far fewer problems in investing in new coins. Central exchanges, such as Binance, only screen authenticated tokens and cryptocurrencies. However, this fact does not preclude the possibility of a sudden dump, but here it is much smaller.
Since the advent of decentralized exchanges, the situation has changed somewhat. Now you can create a pool where the coin that the creator wants will be traded. As a result, it became easier to attract trusting investors, who gave their funds, and then the coin merged. Attackers made their profits, coins were devalued, and investors were left with nothing – an oft-repeated scenario for new cryptocurrencies.
In the beginning, we mentioned that there are over 9 thousand cryptocurrencies and tokens, but their list does not include those that analytical services do not add. It turns out that in fact there are even more of them. There are several criteria for selecting cryptocurrencies and tokens, with the help of which you can reduce the likelihood that the investor will be left without money. Let’s talk about each criterion separately.
By selecting a crypto asset for investment, the first thing to look at is the community behind the asset project. Of course, you don’t have to trust everything strangers say on the Internet. On the other hand, you can find theme groups, channels, chat rooms of the project where live communication of participants of the community. By observing what is being discussed, some conclusions can be drawn about the project as a whole.
You can also talk to a few people about how they value a project or a digital asset. Once the information is received, it should be compared to the other. This is done to find out whether you are being told the truth or trying to attract your investment.
As a rule, every coin has a product. Here the options can be listed for a very long time: decentralized applications, decentralized finance, non-interchangeable tokens, oracle service, social network on blockchain, file exchange, decentralized storage, etc. In short, a new cryptocurrency must definitely have a product behind it, because it must have a practical application that will ensure a stable demand.
If there is nothing behind the digital asset, then there is a high probability of an exit scam of its management. The coin is not backed up by anything, so there will be less trust in it. Of course, representatives of the project can say that the coin acts exclusively as an investment tool and bitcoin can be cited as an example. Let’s not talk about how many people around the world are bitcoin holders. The point here is that Bitcoin was created as a payment system, because people can send it to a friend of a friend, and only then became more like an investment tool. Therefore this comparison is not appropriate and once you have heard or read the phrase about «investment instrument» – you should refrain from investing in this asset.
The team behind its creation can tell you a lot about cryptocurrency. The more well-known the project representatives, the easier it is to trust this project. Of course, we are talking about local fame, that is, in the crypto industry. We are talking not only about developers, but also about media personalities. Here it is worth focusing on the fact that you should not run and buy cryptocurrency if its media face has become, for example, your favorite actor. The same Floyd Mayweather, who clearly does not need money, at the time of the ICO, advertised crypto projects in batches, of which many either “did not shoot”, or appropriated the investors ‘ money for themselves. Therefore, pay attention to the specific individuals who represent the project.
You probably heard about the new coin not at the time of its release, but a little later. Here, you should look at asset pricing. As practice shows, when a new coin is traded, the price often flies to the top. It doesn’t tell us anything, it happens to every second project that starts. What matters is how the price behaved after the release. If the graph shows a clear fall and the coin is now in a flat, it only indicates that it has been sold in large numbers and that further growth is unlikely. If, after the release, the price went for correction, but not for a long time and even managed to stay on high indices, it is clearly not going to flush the coin.
Analyze the market for the presence of competitors of the coin and its product. If there are any, then find out how they are doing. After that, make a conclusion about whether this crypto asset will be in demand. If the project has no competitors, then ask the question – will anyone need it at all? With a positive assessment, it is worth getting acquainted with the thematic forums and finding out what people are talking about and how they relate to this project.
By adhering to the rules we have just mentioned, you can reduce the probability of your investment losing, but you can’t eliminate it completely. If you are interested in trading in new coins, pay attention to RevenueBot. The service provides the ability to create trading bots for trading on top crypto exchanges. More recently, the service has added special lists that show new coins on the exchange, for the last month. The rest of the RevenueBot features can be found on the official website.